May 9, 2013 / 7:41 AM / 5 years ago

Nikko Asset suspends subscription of Japan equities fund

TOKYO, May 9 (Reuters) - Nikko Asset Management, Japan’s third-largest fund manager, said it has halted subscriptions of its Nikko Small and Middle Capitalisation Growth fund from Thursday after the size of assets under management approached the limit of 55 billion yen ($556.57 million).

The move underscores growing interest from cash-rich Japanese retail investors to invest in domestic equity funds after Prime Minister Shinzo Abe’s policy of aggressive monetary easing and reflationary policies, dubbed “Abenomics”, boosted domestic shares and pushed down the value of the yen.

The fund generated an investment gain of 105.40 percent over the past year to April 30, although it has produced a negative return of 9.44 percent since inception in November 2005.

The fund’s top three shareholdings include offshore drilling contractor Japan Drilling, medical equipment maker Medinet Co Ltd and apparel maker United Arrows Ltd .

Japanese equities funds have been in demand over the last few months due to sharp gains in domestic share prices since mid-November. The Nikkei share average has surged nearly 70 percent and the yen has dropped about 25 percent since mid-November when Prime Minister Shinzo Abe announced his plans to fight deflation.

In April, JP Morgan Asset Management halted new subscriptions to its Japanese equity mutual fund called “JPM The Japan” fund because it was nearing its limit of 200 billion yen.

Net inflows into Japanese equity funds totalled 423.8 billion yen in April, the fourth consecutive month of net inflows in the asset class, according to Nomura Research Institute.

($1 = 98.8200 Japanese yen)

Reporting by Chikafumi Hodo

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